Power of Crowdsourcing
Crowd sourcing is a fairly new
phenomenon that has shaken the basics of various industries, business models
and enterprise decisions. Right from getting inputs to product designs to
utilizing pictures from Instagram for running marketing campaigns this practice
of leveraging collective intelligence is now becoming main-stream.
With the success of this practice
manifesting in many walks of life, we can take a look at some of the examples
to see how well this model has been adapted.
a) Quirky - Adopted Crowd sourcing into their Product
Development process and called it Quirky Social Product Development.
Individuals submit product ideas which is then curated by the community, reviewed
by a product evaluation team before its designed, engineered and mass produced.
A percentage of resulting sales from the product is then shared with the person
who proposed the product idea. With projected revenue of 54 Million USD by 2014,
Quirky is quietly becoming the Mass Market consumer product manufacturer.
b) Wal-Mart: In 2011-12, Wal-Mart started with the Get on the
shelf initiative, where it invited public to submit great product ideas and
then through a review process and thrown open for voting. Finalists were chosen
based on the votes and rating and their products were available online and in
stores. Human Kind in 2012 and Elvis Presley Home Bedding Collection in 2013
were chosen as winners (see https://getontheshelf.walmart.com)
c) InstaCart: Grocery
service provider that leverages the power of crowd sourcing to delivery grocery
to homes within an hour of order getting placed. Company began operations in
San Francisco but has rapidly scaled up to cover cities like Boston, Chicago,
NYC and has also expanded partnership with retailers like Whole Foods, Shaw's,
Market Basket, Harvest Coop and more. With revenues rising more than 2X times
in the last few months, there is a great growth story for the company.
There are numerous other examples
of L'oreal, Coach and other fashion retailers seizing this opportunity to put
together marketing campaigns and/or product images that borrow on photos and
amateur images from social media sites like Instagram and Pinterest.
Real benefits in Crowd Sourcing? Clearly the benefits are not very hard to see
- For brands that weave in crowd sourced images for product display or marketing the benefit is plain and simple - imaginative, original and authentic
- Crowd sourcing helps disrupt the existing business model and creates new opportunities for startups. A classic example is that of Instacart that has successfully launched same hour Delivery for Grocery orders where larger players were struggling with same day deliveries.
- For companies like Quirky, it is about accelerating innovation and cutting overheads and operating costs associated with typical New product Introductions.
- For Walmart it's about finding the next Billion dollar of sales by identifying those high potential new products and getting it on the shelf
- For players like Utest it is unlimited access to an expanded set of skills and sometimes hard to find skillsets.
Problem Areas: While we certainly want to focus on the benefits and the key drivers of this model, there are few problem areas that needs to be addressed as well
- The first and foremost would be that of Intellectual Property. Who owns the IP in case the idea is transferred from the founder to companies like Quirky or Kickstarter. Can there be non-exclusive license transfer instead of completely transferring the IP rights?
- How to sufficiently compensate the founders? Is it a onetime lump sum or gain sharing or a commission on sale?
- How do we ensure quality of product or service? Take the case of Instacart - for some orders if items are not found in a store then those items might not be fulfilled leading to lower customer experience.
- Lack of Confidentiality
- Lack of Proper Communication
Key Considerations: Finally for retailers, service providers and manufacturers trying to leverage the power of Crowd Sourcing the following key points needs to be considered to ensure a very effective process and resultant output
- A rating mechanism for the participants in Crowd Sourcing to identify their significance of past and present contributions, social influence, originality of design or ideas. Ex: In case of Instacart rating parameters could include order fill rate and on time delivery by personal shopper. Higher the rating, the better the compensation or assignment for future orders.
- Search Mechanism (using an extensive algorithm) for systematically sifting through enormous amount of data, photos, videos, ideas and products and also considering the rating to identify those opportunities that aid future growth, address under served customers or geographies.
- A workflow driven technology platform that will help the collaborative nature of work right from submission of ideas to reviewing, evaluating, allowing public to register vote and eventually identifying the top picks.
- A palatable profit sharing mechanism to reward the Founders (of idea) based on the outcome - sales of the product or service.
- Re-defining the various roles in the Internal Organization - Product Incubation, Marketing or service teams to adapt to the new model and to deliver creative outputs (campaign, service, product) both from within and outside the organization.